For more information:
Gigi Thompson Jarvis, CAE
202.822.6232 x119
For Immediate Release
2011 College GradsMay be Claimed as Dependents
…whether or not they want to be!
WASHINGTON, DC (April 4, 2012)—If your son or daughter graduated from college last year, you may have been wondering whether your child could or should be claimed as a dependent on your 2011 tax return. Although a large refund may be greatly appreciated by a recent grad living on an entry-level salary, you may feel that you need a tax deduction more than your offspring. Don’t be surprised, however, if you aren’t able to benefit.
“If your childwas under 24 years-of ageon December 31 anda student for 5 months, he or she may qualify as your dependent,” explains John Sheeley, EA, an enrolled agent in Goshen, NY. “A person who can be claimed as a dependent on another taxpayer's return can’t claim his or her own exemption, even if the other taxpayer doesn’t claim the exemption.”
Canny graduates often look for loopholes in the five-month requirement. Since many colleges host their graduation ceremonies in mid-May, they reason that five full months have not elapsed, so they can still claim their own exemption and get more of a refund.
Not so – IRS considers a student who attended college full-time from January 1 – May 1 to have been a student for five months. But this doesn’t mean Junior won’t have to file a return. If his income in 2011 topped $5,800, he must file a tax return. If his unearned income exceeded $950, he will also need to file a return.
Unfortunately, due to the Alternative Minimum Tax (AMT),many parents don’t benefit from the deduction even though the child can’t take the exemption. While the majority of Americans don’t understand the AMT, the IRS describes it as a tax that “attempts to ensure that anyone who benefits from certain tax advantages pays at least a minimum amount of tax.” Although it was originally developed to make sure the wealthy were paying their share, at today’s income levels the AMT applies to a lot of middle income families. The AMT does not allow the standard deduction, personal exemptions, or certain itemized deductions. President Obama has proposed abolishing the AMT in favor of the “BuffettRule,” which would require people making more than $1 million a year to pay at least 30 percent in taxes. However, no one thinks the AMT is going away anytime soon.
If you find the AMT hard to understand, you’ve got plenty of company. Consider consulting a licensed tax practitioner to make sure your tax returns are correct. Enrolled agents, “America’s Tax Experts,” can get your taxes right and make sure you benefit from every credit or deduction to which you are entitled. If you or someone you know is in tax trouble, an enrolled agent (“EA”) can also represent you before the IRS. To locate an EA in your area, go to the “Find an EA” directory at
About Enrolled Agents
Enrolled agents (EAs) are America’s tax experts. They are the only federally-licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS. While attorneys and certified public accountants are also licensed, only enrolled agents specialize exclusively in taxes. Enrolled agents are required to complete many hours of continuing education each year to ensure they are up-to-date on the constantly changing tax code and must abide by a code of ethics.